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ASSEMBLY THIRD READING
AB 18 (Brownley)
As Amended May 27, 2011
Majority vote

EDUCATION 9-1 APPROPRIATIONS 17-0

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|Ayes:|Brownley, Norby, Ammiano, |Ayes:|Fuentes, Harkey,|
| |Butler, Carter, Eng, | |Blumenfield, Bradford, |
| |Halderman, Wagner, | |Charles Calderon, Campos, |
| |Williams | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Buchanan | | |
| | | | |
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SUMMARY : Restructures, commencing in fiscal year (FY) 2015-16,
California's system for allocating state funding for public schools.
Specifically, this bill :

1)Makes legislative findings and declarations related to problems
with California's current education finance system, and the lack
of information on and understanding of how money is allocated to
school districts and to schools within any school district.

2)States legislative intent to implement comprehensive school
finance reform that builds on previous research, provides
appropriate incentives, establishes simpler allocation formulas
that provide base funding along with an amount that is tied to the
specific needs of pupils, improves rationality and equity in the
system, supports accountability and local flexibility, and holds
local education agencies harmless by transitioning to the new
system as new funds become available.

3)Consolidates, commencing in FY 2015-16, the funding for 25
existing revenue limit add-ons and categorical programs (see Table
1) into a base funding apportionment to school districts, and
provides this funding on the basis of average daily attendance
(ADA).

4)Consolidates, commencing in FY 2015-16, the allocations for eight







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existing categorical programs (see Table 2) into Targeted Pupil
Equity funding for the purpose of creating weighted pupil funding,
and provides this funding to school districts and charter schools
on the basis of the number of English learner and economically
disadvantage pupils; also requires school districts and charter
schools to use these monies as a supplement to funds otherwise
provided for English learners and low-income pupils, and for any
educational purpose that provides instruction or support services,
with the goal of improving the academic performance or workforce
preparation, to those pupils.

5)Consolidates, commencing in FY 2015-16, the funding for nine
existing categorical programs (see Table 3) into Quality
Instruction funding as a restricted portion of base funding,
requires these funds to be used for class-size reduction or
professional development, and provides this funding to school
districts and charter schools on the basis of ADA.

6)States legislative intent to:

a) Use the base funding apportionment, in conjunction with
other base funding provided to school districts, for any
educational purpose necessary to maintain and improve the
educational services provided to all pupils in the district;

b) Use the Targeted Pupil Equity funding, in conjunction with
funding provided to school districts and charter schools for
all pupils, to appropriately weight educational funding so as
to provide additional resources for the instruction of English
learners and low-income pupils and to enable school districts
and charter schools to direct resources toward improving the
academic performance of those pupils; and,

c) Use the Quality Instruction funding, in conjunction with
other base funding provided to school districts and charter
schools, to maintain and improve high quality instruction in
all classrooms and to enable school districts and charter
schools to direct resources toward improving the academic
performance of all pupils by supporting teaching and
instructional leadership.

7)Specifies that nothing in these funding provisions authorizes a
school district, which receives funding on behalf of a dependent
charter school, to redirect this funding for another purpose
unless otherwise authorized.







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8)Requires the Superintendent of Public Instruction (SPI) to study
and report to the Legislature and the Governor on or before
December 1, 2012, regarding:

a) Modifications to the standardized account code structure
(SACS) to provide school-level reports on revenue and
expenditures so as to facilitate easy comparisons across
schools and districts, including comparisons of school,
district, and statewide demographics and academic performance,
and data on program-level expenditures; and,

b) An evaluation mechanism to facilitate continuous
improvement, maximum transparency, and accountability of the
primary funding structures, as well as a consistent process to
evaluate the effectiveness of any specific programs that are
funded separately.

EXISTING LAW :

1)Provides for Revenue Limit (base discretionary) funding for school
districts that is, in part, based on ADA, and establishes and
funds categorical programs that focus resources and/or compliance
requirements on specific classes of students or schools, or on
specific uses of funds, identified by the Legislature as
priorities; also consolidates a number of historical categorical
programs into a smaller set of block grants, where a block grant
gives funding recipients the flexibility to spend the funds across
any of the previously individual programs consolidated into that
block grant, and provides for temporary flexibility to spend the
funds appropriated for nearly all categorical programs in order to
relieve local budget pressure created by the current economic
downturn.

2)Requires the development of the California Longitudinal Pupil
Achievement Data System, and authorizes the use of standardized
account code structure (SACS), developed by the California
Department of Education, to account for revenues and expenditures.

FISCAL EFFECT : According to the Assembly Appropriations Committee:

1)General Fund (GF), Proposition 98 reallocation of specified,
existing categorical program funds, in the hundreds of millions.

2)GF administrative costs to the California Department of Education







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(CDE), likely between $150,000 and $300,000, to make
recommendations regarding statutory and regulatory changes that
would be necessary to support the development, implementation, and
use of comprehensive school-level financial data. These costs
include system changes to support the reporting of this
information by school districts.

COMMENTS : The "Getting Down to Facts" studies published in 2007,
the Governor's Committee on Education Excellence and subsequent
researchers have all described California's education finance system
as being complex, irrational, administratively costly and
inequitable. According to the author, "AB 18 is a vehicle for
comprehensively reforming the state's public school finance system.
The first step in this reform process is to simplify the number of
funding streams provided to school districts and to provide
continuing flexibility in the expenditure of those funds." The
author also states that the bill "provides a transition over time by
allowing the Legislature to direct funding toward increasing the
weight given to the targeted funding, or providing COLA or
equalization to any of the funding pieces, as new funding becomes
available. In this way districts will continue to receive their
pre-transition levels of funding and no district would lose funding
as a result of the move to the new system."

Commencing in 2015-16 after the end of the current budget
flexibility provisions, this bill:

1) Adds approximately $2.4 billion in existing categorical
funding to school district base discretionary funding provided
on the basis of ADA (see Table 1).

2) Targets approximately $2.1 billion in current categorical
funding on services for English learners and low-income
students and provides the funding on the basis of the number of
those pupils. These funds serve as the weighted targeted
funding in what can be viewed as a weighted pupil funding
system (see Table 2).

3) Provides $1.8 billion in Quality Instruction funding from
existing categorical allocations, and provides it on the basis
of ADA; these funds are required to be expended on a broad set
of instructional support activities, including class-size
reduction, professional development, or school staff training
(see Table 3).








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This proposal, since it enacts changes commencing in FY 2015-16,
would also serve to eliminate the uncertainty that school districts
are facing with respect to the lack of an exit strategy from the
current budget flexibility provisions. At this point in time,
budget planning at the local level beyond 2014-15 is impossible in
that it is unknown whether some flexibility provisions will continue
or whether categorical funding will return to its pre-flexibility
state. Enactment of this proposal would constitute something of a
compromise between continuing full flexibility and full return to
restricted categorical funding.

This bill also requires the SPI to make recommendations for the
modification of the state's existing fiscal systems to support more
comprehensive school-level financial reporting. There are clear
benefits to school-level fiscal reporting - many related to
increased transparency and sensitivity to possible intra-district
funding and service inequities. In addition, school-level financial
data reveals the effectiveness of expenditures at the intended point
of impact - the school and classroom. School-level financial
information would serve a variety of audiences, including the
general public, education researchers, school administrators, other
district and school employees (e.g., program coordinators, classroom
teachers or non-instructional employees), local governing boards,
the Legislature, and investors and creditors (e.g., bondholders and
prospective bondholders, commercial banks, other creditors,
vendors).


























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-------------------------------
| Table 1 - Added to Base |
| Funding |
|-------------------------------|
|Unemployment Insurance RL |
|Add-on - 15 year avg.|
|-------------------------------|
|PERS Adjustment Add-on - 15 |
|year avg. |
|-------------------------------|
|Supplemental School Counseling |
|Program |
|-------------------------------|
|Home to School Transportation |
|(except Special Ed) |
|-------------------------------|
|Specialized Secondary Program |
|Grants |
|-------------------------------|
|Gifted and Talented Program |
|-------------------------------|
|Educational Technology - CTAP |
|-------------------------------|
|Emergency Repair Program |
|-------------------------------|
|Deferred Maintenance |
|-------------------------------|
|Instructional Materials Block |
|Grant |
|-------------------------------|
|Community Day Schools|
|-------------------------------|
|National Board Certification |
|Incentives (excluding funds |
|for prior awards) |
|-------------------------------|
|California School Age Families |
|Education (CalSAFE) |
|-------------------------------|
|California High School Exit |
|Exam-Instructional Support and |
|Services |
|-------------------------------|








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|Civic Education |
|-------------------------------|
|Teacher Dismissal |
|Apportionment |
|-------------------------------|
|School Safety Block Grant |
|(8-12) |
|-------------------------------|
|Class Size Reduction (9th |
|Grade) |
|-------------------------------|
|Advanced Placement and |
|International Baccalaureate |
|Programs |
|-------------------------------|
|Pupil Retention Block Grant |
|-------------------------------|
|School and Library Improvement |
|Block Grant|
|-------------------------------|
|School Safety Consolidated |
|Competitive Grants |
|-------------------------------|
|Arts and Music Block Grant |
|-------------------------------|
|Child Oral Health Assessments |
|-------------------------------|
|Adult Education - Schedule (1) |
-------------------------------
-------------------------------
| Table 2 - Targeted Pupil |
| Equity Funding |
-------------------------------
|Supplemental Instruction |
|(Summer School) |
-------------------------------
|Economic Impact Aid |
-------------------------------
|American Indian Early|
|Childhood Education Centers |
-------------------------------
|Adult Education Schedule (2) & |
|(3) |
-------------------------------








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|Charter School Categorical |
|Block Grant (proportional to T |
|programs) |
-------------------------------
|New School Categorical Funding |
|(proportional to T programs) |
-------------------------------
|Community-Based English |
|Tutoring Program |
|-------------------------------|
|Targeted Instructional |
|Improvement Block Grant |
| |
-------------------------------

-------------------------------
|Table 3 - Quality Instruction |
|Funding |
|-------------------------------|
|Mathematics and Reading |
|Professional Development |
|Program |
|-------------------------------|
|Administrator Training Program |
|-------------------------------|
|Bilingual Teacher Training |
|Assistance Program - Schedule |
|(1) |
|-------------------------------|
|Teacher Peer Review - Schedule |
|(2) |
|-------------------------------|
|Class Size Reduction (K-3) |
|-------------------------------|
|Teacher Credentialing Block |
|Grant |
|-------------------------------|
|Professional Development Block |
|Grant |
|-------------------------------|
|Physical Education Teacher |
|Incentive Grants |
|-------------------------------|
|Certificated Staff Mentoring |








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Analysis Prepared by : Gerald Shelton / ED. / (916) 319-2087


FN: 0001108